IIRA Assigns Fiduciary Ratings to Albaraka Turk

Manama, February 25, 2015 - Islamic International Rating Agency (IIRA) has assigned a foreign currency rating of 'BB+/A3' (Double B Plus / A Three) and a local currency rating of 'BBB-/A3' (Triple B Minus / A Three) on the international scale to Albaraka Turk Katilim Bankasi (ATKB). IIRA has also assigned a national scale rating of 'AA-(tr)/A1(tr)' (Double A Minus / A One) to ATKB. Outlook on the assigned ratings is 'Stable'.

IIRA has assessed the bank's overall fiduciary score in the range of '76-80', which indicates strong fiduciary standards and a well-developed governance structure, wherein rights of various stakeholders are well defined and protected. Owned in majority by the Al Baraka Banking Group (ABG), ATKB benefits from the group's multi-jurisdictional presence, strong franchise and potential for business synergies, in addition to guidance vis-à-vis adherence to interest free banking principles.

The bank's robust risk profile, with sound asset quality indicators, lends support to the ratings. Moreover, ATKB has posted sustained earnings performance over the years, with return indicators being healthy, despite having dipped slightly in 9M2014. A broad based deposit mix depicts strong access in retail markets.

Though capitalization levels presently provide sufficient cushion to absorb losses and allow moderate growth in risk assets with expected profit retention, the bank may require external capital injection to tap growth opportunities and to reinforce its position in the Turkish banking sector. This may be particularly relevant with increasing competition in the wake of growing foreign interest and entry of large network banks in the participation banking space.

Stability at Board and management level has strengthened the institution and has allowed uninterrupted implementation of the bank's business strategy, with rapid business expansion, allowing the bank to keep pace with growth within the participation banking segment. Overall corporate governance framework in place at the bank is considered effective.

For further information on this rating announcement, please contact the undersigned at sabeen.saleem@iirating.com or Mr. Raza Lakhani at raza.lakhani@iirating.com.

Sabeen Saleem, CFA
Chief Executive Officer